Penn National Gaming plans to open three Barstool Sportsbooks this week. The Pennsylvania-based casino operator…
Posted on: July 26, 2021, 09:53h.
Final up to date on: July 26, 2021, 02:24h.
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Penn Nationwide Gaming (NASDAQ:PENN) inventory is mired in a prolonged stoop. The once-sizzling on line casino operator has shed half its worth since March.
The Barstool Sportsbook on the Greektown On line casino in Detroit, seen above. Operator Penn Nationwide might rally, says a analysis agency. (Picture: Reddit)
Now locked in a greater than four-month stoop, shares of the regional on line casino big match the invoice as oversold. This can be a technical situation that can provide approach to short-term rallies in troubled shares. In truth, one analysis agency factors out Penn has a historical past of bouncing when it’s oversold.
The shares now sit across the $70 space, which represents half Penn Nationwide Gaming inventory’s all-time highs and was a key inflection level again in fall 2020,” says Schaeffer’s Funding Analysis.
“As PENN’s 14-Day Relative Energy Index (RSI) drifts under 28 and into ‘oversold’ territory, a glance again at comparable readings prior to now present good shopping for alternatives,” in line with a press release by Schaffer’s.
Penn inventory is off 18.57 % year-to-date, good for one of many worst showings within the gaming business. Nevertheless, the identify nonetheless has supporters on Wall Road, together with some saying the sell-off is overdone. The consensus worth goal on the gaming fairness is almost $108, implying the shares would wish to achieve greater than 50 % from present ranges to succeed in that forecast.
Potential Catalysts for Penn Inventory
Whereas loads of analysts beforehand rushed to defend Penn, with some saying its margin growth story isn’t absolutely appreciated, the identify stays a supply of division on the sell-side.
That might truly work in favor of buyers, as a result of, as Schaeffer’s factors out, a good quantity of analysts are both bearish on the identify or on the fence. If the shares can rebound, that would set off a spherical of upgrades or worth goal revisions.
“Many analysts stay on the sidelines, and a shift towards upgrades and/or price-target hikes might present tailwinds for Penn Nationwide Gaming inventory. Of the 13 brokerages overlaying PENN, six keep ‘maintain’ or ‘robust promote’ rankings,” mentioned Schaeffer’s.
Knowledge point out Penn can be a brief squeeze candidate, which means that if the shares perk up, bearish merchants could possibly be pressured to cowl positions, forcing the inventory greater within the course of.
“There’s additionally room for a possible quick squeeze on Penn Nationwide Gaming inventory. Quick curiosity tapered off in the newest reporting interval, but the 13.25 million shares bought quick accounts for practically 9 % of PENN’s complete accessible float,” provides Schaeffer’s.
Close to-Time period Outlook on Penn Nationwide
A primary avenue for near-term upside for Penn inventory is the corporate’s second-quarter earnings report, scheduled for Aug. 5. Final month, the Ameristar operator raised income and adjusted earnings earlier than curiosity, taxes, depreciation, amortization, and restructuring or lease prices (EBITDAR) forecasts. So there could possibly be restricted room for surprises except the corporate materially guides greater on third-quarter or full-year outcomes.
Though Penn’s land-based casinos are performing effectively and margins at these venues are spectacular, buyers are clamoring for extra out of the net casinos and sports activities wagering companies.
“Penn Nationwide Gaming has expanded quickly into new areas with its growth of Barstool Casinos. And think about for a second that Florida, Arizona, and Connecticut all lately accepted sports activities betting on the state degree. This pattern is prone to proceed as extra states move playing laws, making PENN in pole place to capitalize on such macro tailwinds,” in line with Schaeffer’s.
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